A novel ustilaginomycetous yeast isolated from the intestinal tract of an insect pest of sugarcane roots in Ribeirão Preto, São Paulo State, Brazil, represents a novel species of the genus Pseudozyma based on molecular analyses of the D1/D2 rDNA large subunit and the internal transcribed spacer (ITS1+ITS2) regions. The name Pseudozyma brasiliensis sp. nov. is proposed for this species, with GHG001(T) ( = CBS 13268(T) = UFMG-CM-Y307(T)) as the type strain. P. brasiliensis sp. nov. is a sister species of Pseudozyma vetiver, originally isolated from leaves of vetiver grass and sugarcane in Thailand. P. brasiliensis sp. nov. is able to grow well with xylan as the sole carbon source and produces high levels of an endo-1,4-xylanase that has a higher specific activity in comparison with other eukaryotic xylanases. This enzyme has a variety of industrial applications, indicating the great biotechnological potential of P. brasiliensis.